Clinton Group says Wet Seal backtracks on board control deal

Published 10:56 AM ET Sun, 11 Nov 2012

Oct 3 (Reuters) - Activist investor Clinton Group, which is engaged in a proxy battle with Wet Seal Inc , on Wednesday claimed that the retailer backtracked on an offer to give it majority control of the board.

Clinton Group said an investment banker representing Wet Seal approached it on Tuesday afternoon and said four directors would resign in exchange for the hedge fund settling the consent solicitation process.

The banker said, "it appears you have won," according to a regulatory filing by Clinton Group on Wednesday.

The hedge fund said the banker later called to say that the Wet Seal board had changed its mind.

Wet Seal and Clinton Group were not immediately available for comment.

Clinton, which is the second-largest shareholder with a 7 percent stake in Wet Seal, is seeking stockholder consent to appoint five independent directors to the retailer's board.

Wet Seal offered to nominate two Clinton nominees to the board and also withdrew its shareholder rights plan last month to settle the dispute.

The company's board has 8 seats, with one vacant.

Wet Seal, which has struggled with declining sales for about a year leading to the firing of CEO Susan McGalla in July, reported a 12.7 percent decline in September same-store sales on Tuesday.